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eBay OLPC Sales: Inevitable, Now More Than Ever

21 Sep 2006

From the very start, the One Laptop Per Child leadership has been adamant that it will only sell its first generation 2B1 Children's Machines to governments, and then only in million unit blocks. One Laptop Per Child is open to a commercial version possibility, but only hesitantly and then in much later 2B1 generations.

Back in mid-August, I cut through the clutter and predicted that first generation OLPC laptops would be popping up on eBay days after the very first country took an order. I suggested and still believe that there will be a great amount of "leakage" - laptops siphoned off to friends and family connection for commercial resale from the very beginning. OLPC does not deny this, but doesn't say how they'd completely stop a grey market either.

And now with Nicholas Negroponte's confirmation of eBay sales, they've just ensured a massive grey market for every 2B1 laptop distribution. Why? Negroponte established an eBay price of $450 for 2B1 laptops, generation unspecified. If you are a government entity buying a million computers for $100 $135, which have a market price of $450, why not sell a few thousand to pay for your massive implementation costs?

Better yet, if you are a poor family with two children and both get laptops, why not sell one to a local dealer for $200 and double your family's income for a year? Invested in livestock or new tools, that $200 could lay the foundation for an immediate jump in wealth far beyond anything your non-laptop child could earn 10-15 years from now. Make that loosing child a girl, and in many cultures there will be added social pressure to convert her laptop to cash.

OLPC may now try to minimize the eBay grey market - the re-sale of country specific laptops in the USA/Europe markets for less than their $450 mark-up, but this effort will largely fail. If the price is right, I still say its $250 + shipping, Negroponte's laptops will be popping up in schools near you days after the very first 2B1 Children's Machines are delivered to a developing country, official US versions or not.

On the supply side, OLPC could attempt to disable the laptops if they leave a certain Internet server group. If it's the completely Open Source computer they claim it to be, disabling that safeguard will not be difficult and the sellers may even have help from the very governments who bought the machines in the first place.

On the demand side, Negroponte may also try to minimize the number of people that would import a grey-market laptop through legal channels. If the Canadian prescription drug cross-border market is any indication, Americans are price conscious consumers and will buy a grey market Argentinean 2B1 Children's Machine for $250 instead of a USA model at $450 without pause.

On either side, Nicholas Negroponte's announcement Tuesday only recognized what we already knew; there will be 2B1 Children's Machines on eBay. And yet he made the grey market that much larger with an artificially high Western market price.

23 Comments

I hate to admit it, but you are raising a very serious problem.

It seems to me that the olpc project is very difficult because so many things have to go right. At the least, you have to do a lot of new things with hardware, you have to get the software right, you have to get countries to buy and distribute it, it has to be actually useful in education, and the students can't re-sell it. If just one of these things goes wrong, then the project fails.

Of course, maybe olpc will fail because things go wrong in one area, but then someone will learn from that and start a new project that gets everything right. In that case oplc will have been a failure, but a productive one.

Sell them in North America and Europe for $300. When a person from a rich country buys one, they are also buying a second one for someone in a poor country. The poor country adds $50 as a thank you and sends you a nice card.

The two people are introduced to each other by email and this becomes the personal link for future charitable gifts.

John in North America meets Sarah in Africa. Once he knows what $100 a year will do for her life, his luxuries don't look as important. He can save $100 and send it to her directly as a gift.

No charitys of goverment midleman nonsense. A personal firendship.

I was on a yahoo forum where people were asking for copies of EBooks. I noticed they were coming from one small village and I said what the heck, I made sure it was a real school and sent them $200 in books. These were $50 books from Hentzenwerke and worth every cent.

I wanted them to have the good that could come from the books because they are excellent books. I trusted in God that if they were stolen or resold it was an issue between the thief and God.

Otherwise you never act or you go nuts worrying about it.

I had another idea of taking the same idea for the Livestrong notebooks and making "Knowledge is Dignity" brand models to send $100 per $1000 notebook to an OLPC type program.

In exchange the laptop would also have a button to come up in a flash memory unity with the OLPC software on that PC so that people could play with what they were sending to others. It would be a lot more powerful based on the $1,000 laptops power. But it can be shown to friends and build a network in the first world of "hey.. I can give something like this to a child for $100.. sign me up."

I am currently looking for work myself. If any of you have projects refer them to braxton -at- aol.com.

Well, I hate to be a pain in the ass, but it's "now more than ever," not "then." Kind of ironic to get the grammar wrong when you're writing about a laptop that's supposed to help educate children around the world.

Or is this just your not so subtle pitch to have someone send one of these your way? :)

You say Negroponte "made the grey market that much larger with an artificially high Western market price" of $450. That is not "artificially high". It is the difference between buying in quantity one and quantity one million. A product that costs $125 to make will normally sell at four or five times that at retail, or $500-$600, more or less.

In any case, the cost to the governments does not matter. You are asking whether people who get the computers for free will sell them. Some will. In countries where this would be a serious issue, it may be that food and medicine (or stopping any current wars and insurrections) should come first before the laptop (or perhaps better still, at the same time) so that nobody will feel the need to sell off their children's birthright just to stay alive.

You say Negroponte "made the grey market that much larger with an artificially high Western market price" of $450. That is not "artificially high". It is the difference between buying in quantity one and quantity one million. A product that costs $125 to make will normally sell at four or five times that at retail, or $500-$600, more or less.

In any case, the cost to the governments does not matter. You are asking whether people who get the computers for free will sell them. Some will. In countries where this would be a serious issue, it may be that food and medicine (or stopping any current wars and insurrections) should come first before the laptop (or perhaps better still, at the same time) so that nobody will feel the need to sell off their children's birthright just to stay alive.

There's another issue in play that might influence the decision not to sell these units to us. The OLPC looks like a perfect user device for a whole bunch of vertical applications. Its also exactly what people who just use computers for emailing the kids and the like need. Since the price can't be beat you've got a situation where if it was sold in, say, the US it could take a rather nasty bite out of 'real' PC sales. This could have quite an impact on the business, an impact that might even trickle down to the companies supplying the parts for the OLPC. (Think about it -- if allowing someone to sell one of OLPC kills a sale of a $1K system then everyone in that real PC chain's going to lose.) The effect may be worse in reality since many people are going to discover that you just don't need to spend thousands on a computer. (In fact I wouldn't be surprised to learn that there's some kind of agreement that restricts sales of this unit in developed countries -- you're supposed to buy Vista and the hardware to run it, not this thing!)

I still want one. It makes my Motion tablet computer look really klunky. I'll just have to think up an application for it. I will not be buying grey, though....we need to discourage corruption.

Solution to cut down on a grey market? Flood the market via a commercial outlet selling the laptop for low cost. (Under $200 shipped)

This would *almost* put a stop to foreign (overseas) sales online by making it cheaper to buy one directly from OLPC than it would to buy a foreign government's XO. Suppose foreign gov't sells their laptops for $150 + overseas shipping... or you could get a "legit" XO for under $200. For the $20-30 you'd be saving, you could have a legit XO with the peace of mind knowing you helped OLPC directly via profit. The trick is making them commercially available, and that would require alot of capital upfront to produce enough to meet public demand.

i will appreciate if OLPC is available to organization with charitable motives because a laptop of $100 means my foundation can donate like 100 units across Primary School in my country and still open up channels for people to partake in the process.Leaving it entirely for Government in Less Previledged countries is not a good idea,bearing in mind most of this countries have a corrupt system.The distibution of OLPC should be a joint venture between Governments and concerned voluntary organization.OLPC should hold the Governments accountable sinces it's so cheap

We now have OLPC eBay sales! A live auction is on for an OLPC developer board and current bidding is just $19, significantly below the "$100 laptop" marketing price. Of course, the functionality is significantly below a BTest-4 too:

If a family want to sell their OLPC for livestock, I don't see what the problem is. They should be free to use them as they see fit. I don't think there's any shame in buying them, even if that's where they come from.

I didn't have a personal computer when I was a kid, because there weren't such things. It wasn't so difficult to pick up when it became necessary. I (and many people of my generation) learnt computing for years without actually seeing a computer, never mind using or owning one, from written material.

Surely, as you approach a stage in your life where computers are necessary, then you start encountering them: in underdeveloped countries as much as overdeveloped ones? If economic, geographic, or other conditions make the use of computers uneconomic, then it is a useless skill?

Numerous educational studies have shown that we've not managed to use computers (even in the overdeveloped world) to make the teaching of (non-inherently technological) subjects more efficient and economic than using with traditional methods, so I'm not sure why we're so confident that this part of OLPC will succeed?

SALES,
I WOULD LIKE TO PURCHASE A PRODUCT FROM YOUR,KINDLY LET ME KNOW THAT I WILL PAYMENT BY CASH US dollars AND I WANT YOU TO KNOW THAT I FORM USA ,KINDLY ALSO LET ME KNOW IF YOU SHIP TO MY STORE IN AFRCIA BY UPS FEDEX AND DHL,IF YOU DO SO,KINDLY FORWARD ME YOUR WEB PAGE,SO THAT I CAN FORWARD YOU THE PRODUCT DETAILS I NEED

i disagree that a mosquito net or a latrine would do more good than a laptop. we need to improve the quality of human existence, NOT the quantity. there are billions and billions of us, and more are being born every day. XO represents a possibility for these children of a life beyond mere subsistence.

I think they shouldn`t claim that selling on ebay in quantity one is making the price 2-3 times higher, because actually they may sell more olpcs on eBay (one-by-one) than to any single government.
Not everyone wants to donate laptops to developing countries, so they can sell it slightly overpriced (with +$50 for example) to such people and still use this $50 to send 1 laptop from 2-3 sells.
(sorry for errors in my english)

I browsed the comments and didn't see this already mentioned: where is guilt when you need it? You know what would help curb black market purchases of OLPC hardware? Everyone being aware of what they are, who they're for, and upon hearing that their friend bought one on ebay, berating them for *taking away from children who couldn't begin to dream of the position of opportunity that friend was born into.*

The vast majority of people don't go around doing things that their friends think are despicable, that their family, their husbands and wives, that their religion or community think are despicable. If you haven't already seen or aren't aware, the vast majority of 'why don't we do things this way?' questions posed to the project are answered with a simple obstacle: Cost. How do you keep the unwanted sales of these laptops as low as possible? Imagine when people on the street know and understand that these laptops are built with a purpose, and people who buy them as a novelty on ebay are plain and simple, flat out, no questions asked, working against that purpose, working against children. *There is no gray area here.*

The problem here is, in my opinion, apathy or ignorance towards the obstacles this project faces, and to a lesser extent, not treating others as you'd like to be treated. I know the morality of the purchasers of such laptops isn't in question, but maybe the inherent immorality of these black market purchases should be used as a deterrent to others who fall only into the ignorant category? We're worried about entities as large as governments undermining the project? I don't think that would be a problem if the government would be seen as *stealing from children*. Are we really beyond that point as a species, that taking from children en masse can and would go without consequences? If we really do live in the world that some of these worriers paint, then not only will these laptops do no good, but I fear nothing would.

I also think many of the posters of comments above forgot that "this is an education project, not a laptop/computer literacy project". Also, as at least one of these laptops made it to a child, I can't imagine ever referring to the project as a failure.

Expect more from the people you know and the people you don't, from communities and governments. Transcend your old ideas about the world, people. OLPC is about *changing* it, not the status quo.

What's wrong with making XO available to the rest of the world (outside the developing countries it seeks to benefit)? I think Nicholas Negroponte has to make XO available to anybody who wants to buy one. There is a market need for the product and its only a matter of time someone will supply this. The other issue is at what price? Sell it at the same price you sell everybody else. If a buyer can buy the same XO for a cheaper price, why would he pay a higher price? Now maybe if it has better features than he would be willing to pay a higher price for this. All I am saying here is not new. A first year marketing student could tell you the same. What this shows is OLPC has to gear up to operate in a business environment. And while we are at this, why does OLPC limit its sale to governments at quantities of 1 million units? Where will governments whose needs are less than a million get theirs? And what of non-government groups who have their own education programs get theirs?

There's nothing wrong with distributing the XO in the developed world, and that's exactly what OLPC America and the Give Many program were created for. Also, there's signs that OLPC is will to work with any government that's interested in widespread dispersal of the XO in their country's school system.

As for the orders, OLPC has taken orders under 1 million units. Peru only ordered 260,000 units, or about a quarter of a million. However, OLPC isn't really structured like an organization that could release a product for retail. Hell, they couldn't even handle the orders from the G1G1 program. The small size of the organization itself means the best use of its limited resources for selling at cost is to aim for a small number of orders that are for tens to hundreds of thousands of units each. The best way to get those large orders is to deal with the governments of countries. Considering that OLPC wants every child to have an XO or similar device, this currently makes the most sense given their current structure.

Also, as a non-profit, OLPC may have specific restrictions on how they can distribute the XO. Note that all the lower-quantity order programs have a donation aspect to them. In this case, it may be possible for OLPC to license the technology to someone who can release a retail product.

However, I'm not sure it's a good idea to release something that's exactly the XO to retail. The XO and Sugar specifically are designed with the classroom in mind, one where every child in it has an XO. Take the XO out of the classroom, and you have something that very much looks like a toy, can't feature most of its innovative cross-communication with other XOs, and even when reformatted to another OS, is a lot like an underpowered laptop by the standards of most developed nations. Let products like the eee or Mary Jo's machine fill in the niche for the tech-heads that want an ultra-small laptop, and let those products take the lessons learned from the XO in terms of power consumption and screen and electronics innovations. Leave the XOs for children and schools.